Are you being recognised as a CDP Water leader?

If you are about to begin finalising your CDP Water response submission for the June deadline, you’ll probably be interested in how to get recognised in the ‘Water A list’ and published in the CDP Global Water Report 2016.

Demonstrating continued water leadership to investors continues to be a growing area of active risk management for our clients. The World Economic Forum’s ‘Global Risks Report 2016’ again puts ‘water crises’ as one of the top global risks facing businesses this year and as the number 1 global risk over the next 10 years.

It’s a ‘3 part’ water risk problem

Not enough water – This time last year, “extreme to exceptional” drought covered two-thirds of California, placing agriculture, local economies and communities at risk;

Too much water – South-east China continues to suffer significant volatility, from drought to three times the average rain; and

Quality of water – Organisations are now including water quality indicator reporting for the first time, given the increasing future investment requirements to improve unsafe and poor quality water.

CDP Water’s initial objective was securing water disclosure and reporting. In an attempt to go beyond this, they amended their requirements last year to focus on the importance of leadership, recognising the need to encourage business to take initial steps and ‘put their heads above the parapet’.

This year, CDP Water are allowing respondents to consolidate their response and drive towards a solid leadership position; only minor changes to the 2016 wording and drop-down options have been made since last year. Positive actions will however continue to be recognised as leadership activities in 2016 – actions such as looking beyond your own operations; collaborating on impacts in your river basin; looking at how procurement supports an understanding of ‘imported’ water risk to your activities/operations; and going public with your disclosure.

Getting the best account of water management and longer term risk remains an important material concern to investors. Once finalised, a CDP Water score, whether made public or not, will still be shared with investors via the investor portal. Companies can look to benchmark their approach and scoring in a way that supports continuous improvement and collaboration in 2016.

Our top tips for 2016:

By getting organised, engaging stakeholders, gathering data, and planning your course of action before you begin your CDP response, you can save time, energy, and resources. Preparing to respond in advance will also make you more successful in improving your scores and increase the value of your participation in CDP. Here are our recommendations:

• Review last year’s response: Before beginning your 2016 CDP Water response, take the time to review last year’s and determine where you can concentrate your efforts to improve your 2016 scores. It can also be useful to review the responses from other companies in your sector, as well as CDP annual reports, to increase your understanding of leading practices in both disclosure and performance.
• Review this year’s questionnaire, response guidance, and scoring methodology: CDP updates the water questionnaire annually, and understanding what is being asked in advance can help prevent time-consuming mistakes further down the road. By familiarising yourself with the questionnaire, response guidance, and scoring methodology, you can also begin to develop a plan for your response, including identifying new questions or areas of the questionnaire in which you will need either internal or external support.
• Develop your response plan: Depending on the size and complexity of your organization, your CDP response may be a complicated and time-consuming process. Developing a project plan with timelines and deliverables, along with identifying the important stakeholders you must engage to prepare your response, is a crucial part of a thorough process. Take the time before you begin to:
  • Engage senior leadership for internal support
  • Develop a cross-functional team composed of members from all impacted departments
  • Assign key roles for data collection, data management, and the CDP response
  • Create a project plan with clear milestones and deadlines
• As you begin to formulate your response, keep in mind that CDP typically awards more disclosure points to responses that have been completed as thoroughly as possible, so you must respond in as much detail – to as many questions – as possible.

If you would like support in preparing your 2016 CDP Water reporting and particularly how to maximise your score for leadership status, please drop our water experts an e-mail or give us a call.

Andrew Noone is an Associate Director at Anthesis Group. You can contact Andrew directly at Andrew.Noone@anthesisgroup.com.